Police say the man was surfing with a friend near Bunker Bay when the shark attacked him Sunday, The (Perth) West Australian reported.
Dunsborough Police officer-in-charge Sgt. Craig Anderson said the 21-year-old died before his friend and another surfer pulled him out of the water.
"Out of nowhere it would appear the young fellow has been taken by a shark, nobody actually saw the shark itself, but they retrieved the young man's body in the water amongst some blood," Anderson said.
A boat was searching the water for the shark, which has yet to be seen or identified, PerthNow reported.
Anderson said weather conditions were prime for sharks at the time of the attack.
"Talking to a local this morning you could have described it as perfect shark conditions, you know dark and gloomy water, overcast skies, light rain falling, there was whale action earlier in the morning in the bay, and there were seals about," he said.
The beach has been closed since the incident and is expected to say closed until at least midnight Monday.